After two hundred million selling consoles, Sony was arrogant, and complacent. They thought consumers would buy anything they released for a ridiculous price with little quality software and an underdeveloped online system.
Over three years, they've just about managed to recover from their mistakes (though not on the financial side), and the positive consequence is that Sony will NEVER make this mistake again.
As for why they still support the platform, because they want to make back as much of their investment as possible. And they don't want to have a failed console.
Why aren't gamers supporting them? Well, the PS3 is $300 now, and that's given it a firm lead in the HD battle, but it's too late to even attempt to beat the Wii. It tapped into a new audience (or rather, enlarged an existing audience - who previously owned PS1/PS2 - and tapped into THEM) and delivered, admittedly, a new gaming experience.
Next generation should be very interesting.
(Former) Lead Moderator and (Eternal) VGC Detective 
